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Chinese New Year 2022 – How to Prepare for Factories closing

Industry Insights / admin / Chinese New Year, CNY, suppliers

Chinese New Year 2022 ET2C international sourcing suppliers

Chinese New Year is an annual event that has a permanent place in any Buyer’s diary. It is a holiday that sharpens focus for Buyers, who must plan around it to avoid delays and stock shortages.

Chinese New Year, also known as the Spring Festival, is the most important holiday in the Chinese Calendar. The festival celebrates the start of the Lunar Calendar, its date is not a fixed day but changes every year. For about 15 days, families come together to celebrate and spend time together from all over the country.

Chinese New Year for the Manufacturing Sector

A large proportion of factory workers are in fact migrant labourers. The number is not quite what it used to be when Guangzhou was the manufacturing hub of China. By the way, it is still significant with a large section of the 700 million people travelling back home over Chinese New Year involved in manufacturing.

While the official public holiday only lasts for seven days, the majority of factories are closed for extended periods, between two and four weeks, which is referred to as Chūnyùn (春运). This is, in fact, the largest human migration in the world.

train station crowd Shnaghai China people CNY

Chinese New Year for Buyers & importers

With factories closed and most of the country off work, the wheels of China’s manufacturing behemoth grind to a halt. Even after the holiday, it takes a few more weeks to get back up to full production capacity and output.

All elements of the Chinese supply chain take a while to get back online. From general employee churn (some do not return), extended holidays to getting sub-suppliers to full production capacity it can take in excess of one month for factories to be in full production mode (and who would not predict some additional disruption given the past 18 months!).

So, what should companies buying from China (keep in mind other Asian countries also celebrate the Lunar New Year, like Vietnam and Tet) do in the run-up to Chinese New Year to manage their suppliers and lead times?

Chinese New Year – Tips for Buyers

Considering lengthy factory closures, keep the following in mind as we end the Calendar Year:

1. Staff Turnover

This period of the year is considered the best time to switch jobs in China. Often, workers will move to other factories, which compounds the issue of getting the factory up and running after CNY. As a result, many factories will not be back to full production levels for over a month after the holiday.

China Suppliers manufacturer manufacturing procurement product chinese new year CNY

2. ‘Quality’ Around CNY

Before the holiday, factories rush to get orders out the door. The pressure is intense to meet deadlines and prevent delayed stock from sitting idle (does not help anyone get paid). Inevitably, under such conditions, the risk of quality defects will increase as factory managers have to find a range of creative ways to meet the ex-factory dates.

Similarly, after the holiday, there may be less experienced employees in the factory. This is because HR managers need to recruit new staff for those that did not return. Again, the risk of quality defects may rise, although with the right supplier and quality program in place, this can be avoided. For example, making sure more frequent product inspections are implemented around before and after the holiday will provide greater visibility and reassurance around product quality.

3. Shipping Costs

Freight rates have had a remarkable run in 2021, much to the detriment of importers and retailers, although they have softened into Q4. Chinese New Year always presents a ‘cliff-edge’ for companies looking to ship prior to the holiday and you can therefore anticipate a spike in rates.

4. Payments

Every year, Chinese factories push for payments early to pay their staff bonuses and collect as much cash prior to the holiday. Just be careful, particularly when paying deposits or advances for stock not yet shipped. This is the time of year in which most Chinese factories close down permanently.

5. Chinese New Year 2022

February 1st, 2022 is the first day of the “Year of the Tiger.” The official government holiday lasts from January 31st through February 6th. However, some factories will close earlier in January. So check now with your factory contacts to get their exact closure dates.

A New Year’s Bounce

No Buyer wants to have no stock. So how should companies approach Chinese New Year when it comes to manufacturing in China?

Clearly, planning is central to the solution. For any shipments targeted to land in April and May, you would typically start cutting purchase orders this month. However, due to all the Covid-related supply chain bottlenecks in 2021, many experienced buyers have already placed their orders this time around. Communication is a central part of being able to plan. Make sure you are aware of when your suppliers and their suppliers are shutting down this coming Chinese New Year.

Also, often the period immediately post Chinese New Year for factories can be slow both as factories ramp up capacity, but also a result of customers already being stocked up. If it works for your purchasing cycles, using this downtime to produce your products can present benefits (price and capacity available for you) as offseason orders.

Lastly, remember that the sourcing landscape extends beyond China. Although the Lunar New Year is celebrated in other Asian countries where you may have manufacturing partners (Vietnam, South Korea, Indonesia etc), the holidays generally tend to be less imposing. Also, look for Near Shore alternatives, like Turkey for Europe.

Summary

Make sure you communicate with your partners across Asia when it comes to the Lunar new year, particularly in China. If you need support in this area or just some help on the ground, we are here to help. Contact us at contact@et2c.com.

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China Suppliers: 5 Useful Tips to Find the Best Partners

Industry Insights / admin / China Manufacturing, manufacturing, suppliers, vendors

China Suppliers Manufacture Asia ET2C sourcing procurement find vendors

“China Suppliers” is a popular keyword for buyers and importers when scouring the Internet but it is not always as straightforward as a click of a button. Do you really know how to qualify the most suitable supplier for your business?

“China Suppliers” – those who never searched for them cast the first stone! Certainly, for companies that sell products finding the right supplier lays the foundations for building a successful business. Suppliers should be considered partners given their performance has a material impact on your business, particularly those that are in the early stages of growth.
A bad supplier can negatively influence your sales revenues and margins, reduce the quality of your products and services (which could cause damage to customer relations), disrupt operations and increase costs.
On the other hand, a good supplier – one that you truly partner with – which meets your business needs will provide you with quality products and services. In short, the right factory will set you up for success whereas the a bad supplier can easily jeopardize your business before it has even got off the ground.

‘China Suppliers’ – How to Identify the Best Partners

Making mistakes in the supplier selection process can impact business results at multiple levels. To avoid this, we want to share with you some useful tips and lessons learnt over the past 20 years of sourcing in China. Key to this is implementing a rigorous process that is followed and repeated as you expand your business.

1. Conduct a detailed factory evaluation

Success in offshore manufacturing starts with the supplier selection process. There is a range of factory audits that can give you the transparency you need to identify the right partners, including manufacturing audits, ethical audits (SMETA, BSCI), technical audits and also, where appropriate, internal audit requirements (particularly for specialist products or sectors). There needs to be a ‘base level’ which must be met for your clients, your business and your market for the factory to qualify as a potential partner. Anything less is immediately rejected.

factory vendors supplier manufacturing ET2C Int. sourcing procurement

2. Take an ‘Under the Hood’ approach

As a Partner and a key stakeholder potentially in your business, it is important to try and get a breadth of understanding about the supplier. This includes financials, clients, markets served, qualifications and certifications and any information on the management team. For example, there is public information available on companies in China on shareholding, management team and the number of employees. This information is invaluable as part of a holistic assessment of a factory before you start collaborating.

3. Get the right contracts in place

You want to be working with a professional supplier that sets the parameters of the relationship in a clear and accurate agreement. Such contracts enable you to quickly build trust with your partner and ensure that any intellectual property or other confidential information is suitably protected.

4. Understand the Commercials

Work through a request for quotation process that will enable you to fully evaluate the factory’s ability to deliver against your needs. This starts with the quotation process and needs to make sure that the factory has all the relevant product information to be able to provide an accurate quotation. One should also understand whether there are any minimum order quantities (MOQs), product lead times, payment terms and any sample charges. Although for the latter, it is often the case that you can get this returned on placing your first order. Make sure you factor in freight costs, import duty and any insurance to get your landed costs.

Suppliers China vendors Factory audit partner manufacturing ET2C Int. Sourcing procurement

It is worth also making sure that they have the capacity to deliver your products within the timeline you have agreed. Ask for high-level information (quantity) on the factory’s other orders and do a quick sense check to see what this means in terms of available capacity. Late delivery can be detrimental to your client relationships/sales on the shop floor and can end up undoing all your hard work.

5. Do not evaluate a product or Supplier solely on price

The lowest cost may not always get you to where you need to be. In fact, it might be a risk if your sourcing strategy is only driven by saving on costs. Although product cost impacts gross margin, you should be aware that the cheapest supplier is not always the right one. Conversely, an expensive supplier does not guarantee the best products.

When selecting a supplier consider the broad range of elements that are right for your business. Ultimately, if you value a supplier as a partner, the relationship should be much more than solely focused on cost and this will lead to greater flexibility, MOQs, prioritization, assistance when timelines change, and the list goes on. It is difficult to quantify the added benefits!

suppliers logistics container Asia partner business Et2C Int. SOurcing procurement

*** Bonus Tip: Consider more than one supplier

It is important to have a choice of suppliers and ideally (although not always practical) it should be possible to have a range of suppliers for one product category, perhaps in different markets, so that you can quickly move between suppliers as required. Most companies use a supplier matrix that helps build resilience to shocks in your supply chain.

Need help with “China Suppliers”?

Selecting the best suppliers is critical to the success of your business. We are uniquely placed to help with a presence on the ground in the local market, product knowledge and we can add value when it comes to managing the supplier from development through to shipment.

In the main, having some kind of local presence will only help enhance these relationships whether it be your own office, a sourcing company or some other third-party presence. At ET2C, we provide our clients with the transparency needed to best manage their suppliers across Asia. For more information on how we can help you, please contact us at contact@et2cint.com.

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Supply Chain Trends 2021

Industry Insights / admin / Sourcing Trends, suppliers, Supply Chain, sustainable sourcing

Supply Chain Trends 2021 ET2C International Sourcing Procurement Quality Control

Supply Chain Trends 2021 reaffirm that Sourcing remains an important area of focus, while Sustainability and Supplier Relationships make their entrance into the ranking.

Over the last 18 months, the global pandemic has severely shaken markets and disrupted supply-chains worldwide.

Although there are no doubt still challenges (freight rates, commodity prices and Covid outbreaks), the uncertainty in markets has to an extent abated and supply chain professionals are starting a new phase of planning.

The latest report from the American Productivity and Quality Center (“APQC”), “Supply Chain Management Priorities and Challenges” sets out some interesting data on the impact of Covid-19 on the global supply chain. APQC interviewed over 450 global companies across many industries such as Retail, Automotive, Consumer Goods, Industrial and more. As expected, the pandemic significantly impacted 95 percent of organizations’ supply chains. In addition, over 70 percent of supply chains missed some or all of their business goals for 2020. However, even more interesting are the forecasts for the future and the potential opportunities.

Supply Chain areas of focus 2021

Considering the unprecedented challenges faced by supply chains over the past 18 months, what is next? Where does the focus need to be?

2021 Overall Supply Chain areas of focus – APQC

The participants showed a clear interest in ‘Supply Chain planning’ (81%). ‘Sourcing and Procurement’ resulted as a key focus, scoring second in the ranking of the future areas of focus (79%). But what are the priorities related to sourcing and procurement for 2021 on the back of the Pandemic?

Sourcing and Procurement

The Pandemic has certainly disrupted supply chains (and continues to with freight rates). In addition, it has impacted the businesses’ ability to trade in the majority of cases. For example, retailers have had their stores being forcibly closed through lockdowns. The Sourcing function continues to become increasingly a strategic (rather than operational) function of any company.

The catastrophic impact of the pandemic on companies is certainly a determining factor in the first position of “reducing costs” (35%) – although a common theme for many buyers – as margin growth or profit generation are increasingly important. With the additional costs of freight and commodity costs, there will likely be push back from suppliers back down the supply chain with the Consumer/end-user ultimately having to pay a higher price into the second half of 2021.

This represents a shift from 2020 when the survey had automation and digitization as the top result, which has likely fallen off the list of priorities given there are other more pressing matters to focus on – business survival as a start!

Also, ‘sustainable sourcing’ (34%) has risen to the top of the survey’s results when it was not even mentioned previously. This further suggests that sustainable sourcing is a key trend that will continue to grow in importance and certainly will not be temporary.

It is good to see that ‘improve collaboration and communication with suppliers’ (34%) also features highly. This recognizes the importance of strategic relationships with suppliers that are often only seen as transactional.

Supplier Relationship Management (SRM)

These results support the view that identifying the right suppliers is of strategic importance to organizations. Too often, suppliers are seen as transactional players in any supply chain, when in fact they are strategic partners and, in some cases, transformational. Whether it is product design, innovation, commercial terms, exclusivity or capacity (to name a few examples), suppliers can drive significant value to your business. In a nutshell, the more aligned companies and suppliers will be, the more beneficial it will be for both. Strategic relationships can also provide valuable support during periods of uncertainty, making the business more resilient.

Supply Chain Trends 2021 ET2C Int. Supplier Relation Management Sourcing Procurement

It is therefore key to implement effective supplier relationship management. Although the reduction of supplier costs is a top priority for organizations, looking at a medium-term horizon by empowering your suppliers (and not beating them up on price) will undoubtedly drive more value over a longer period of time.

The constraints of the current business environment make it tempting for organizations to take drastic steps to reduce costs, but they should not sacrifice relationships and collaboration with key suppliers.
The crises of the last year have shown that organizations must work closely with their key suppliers to mitigate risk and quickly address unexpected situations that arise. Through collaboration and stronger relationships, they can identify weaknesses and create solutions that are mutually beneficial.

Top Trends impacting the Supply Chain by 2023

The respondents listed two key trends that will impact the supply chain over the next two years. There were Robotic Process Automation (RPA) and Sustainability.

Supply Chain trends ET2C sourcing Procurement

Robotics Process Automation (RPA)

RPA is broadly the use of metaphorical “software robots” as part of a business process automation or the implementation of artificial intelligence to carry out tasks instead of humans. By automating repetitive tasks and reducing human involvement in transactional work, the potential for errors decreases significantly. In addition, this type of technology improves productivity and efficiency by enabling employees to spend time on more value-added activities.

Sustainability

In the pre-pandemic era, the respondents’ focus was almost exclusively related to technology and driving efficiencies through their supply chain. It appears that post Covid-19 other themes emerged and one of them being the prominence of ‘Sustainable Sourcing’.

An increasing number of companies and organizations worldwide feel the urgency of focusing more and more on environmental, social and corporate governance (ESG) factors, which make up the second trend anticipated to impact supply chains.

This is an aspect not to underestimate, considering that it will impact also the companies’ sourcing strategies. Certainly, sustainability-related subjects and issues will influence how companies identify and evaluate potential new suppliers and monitor existing suppliers.

Interestingly, the prioritization of sustainable sourcing is not perceived as just a reaction to media, consumer, and regulatory pressure. It is more and more evident that sustainable sourcing provides tangible benefits in terms of speed, efficiency, and risk mitigation. For this reason, procurement will need to include ESG in its strategic plans to carefully consider and coordinate all interactions with suppliers and reach their sustainability goals.

Supply Chain Trends – Summary

Of course, the Pandemic has brought some aspects of companies’ supply chains into focus. Supplier relationships are central to driving value through your supply chain. A shift away from transactional to more strategic (collaborative) relationships will support a company’s growth targets.
At ET2C, we look to provide our clients with insights across our manufacturing base. We understand your needs, and are well placed to address your needs. For more information, please contact us at contact@et2cint.com.

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Supplier Contracts: NNN Agreements & Other Tips

Industry Insights / admin / Contracts, NNN Agreements, Supplier Contracts, suppliers

Supplier Contracts sourcing ET2C Int. Procurement

Supplier contracts are vital for maximizing the benefit of sourcing in Asia. Yet many companies do not consider the local laws in place to their detriment.

Supplier contracts underpin any transactions with Asian manufacturers. They define your legal relationship with a foreign manufacturer in a foreign jurisdiction. However many companies still fail to consider the local law and its application when getting contracts agreed. Where disputes do ultimately arise this can be problematic, and a reliance on a contract as a means of recourse or compensation may prove disappointing.

So, as a company that has been operating on the ground in Asia now for over 20 years, we wanted to give you some tips on what you should be looking for when it comes to supplier contracts. Just a word of caution though, we are not writing this as a lawyer. Therefore, for any areas below that you want to enquire into, please be sure to take the appropriate legal advice.

The Landscape

Over the past 20 years, as manufacturing migrated out East on a mass scale with the accension to the WTO by China (and to today with a more fluid sourcing landscape across Asia) many foreign companies moved production out East and contracted with local Asian companies in their respective markets to produce goods. Clearly, different countries have different legal systems and different laws. This may sound like an obvious statement but the assumption that US law will have enforceability necessarily in China, as an example, is perhaps wide of the mark. And that is not to say that Asian legal systems are less developed than other Western markets (in fact that the Chinese legal system is one of the oldest in the World) but they are different and understanding these differences and how to protect your company is the key point here.

Supplier contracts ET2C Int. Sourcing procurement quality control

To take one simple example of how different legal systems can be; the ‘Chop’ in China is equivalent to a signature and can bind a company in an agreement or contract. So, securing the Chop is an important internal control that we do not have in the West.

There have been numerous books written over the years on the perils of manufacturing in Asia (a favourite being ‘Mr China’ by Tim Clisshold) and we have certainly seen issues arise. Inevitably for companies that are contracting directly from overseas in a different language with a foreign manufacturer, there will always be scope for a misunderstanding or possible breach of contract. Having legal recourse via a supplier contract is, therefore, an essential part of doing business in Asia.

Key Tips for Supplier Contracts

We have set out below some key points for you to think about when drawing up supplier contracts (with a leaning to supplier contracts with Chinese suppliers):

1. NNN Agreements

This is a good example of applying legal norms in one’s own market to a foreign market. Traditionally, companies have used Non-Disclosure Agreements (“NDAs”) when it comes to protecting IP or sharing any confidential information with Asian manufacturers. In markets, such as China, this does not offer sufficient protection.
Instead, an NNN Agreement (non-disclosure, non-use, and non-circumvention) provides greater protections. It covers some practices that manufacturers could do to take your product and sell it under their own brand. Actually, in China it is more effective under the law because it provides for liquidated damages instead of injunctive relief which is essentially enforceable by a Chinese Court.

Contract Agreement Supplier ET2C Int. Sourcing Quality Assurance Procurement Vendors

2. Contract Language

Think which language is most appropriate to remove any misunderstandings or mistranslations. Often, this statement would lead to most companies drafting their NDAs in English. However, you should certainly take into consideration the use of a domestic language. Clearly, this means professional translators may need to be involved but this is the best way to remove any confusion.

3. The Governing Law

Commonly companies will use their own law as the Governing law for any contract. This is primarily because they understand the recourse available. However, when it comes to enforceability, this can be more problematic. For example, a contract governed by US law although recognized in China, will still be viewed through Chinese Civil Law procedure. This will make its enforceability even more complex and administratively burdensome, not to mention the costs. It is worth noting that HK law is enforceable in China via a Chinese notary and has the benefits of a known Common Law system.

4. Jurisdiction of Courts

Similarly, you may want to think about the Jurisdiction of the Courts. If an American Court provides a judgement, then getting it enforced in China (as an example) won’t be easy. There is no treaty between China and the US, which renders the judgement worthless. Having a Chinese Court would likely provide greater protections.

Supplier contracts ET2C Int. Sourcing procurement quality control

5. Commercial Levers

This is probably the most important tip and should hopefully keep you away from complex and lengthy legal claims. There is no doubt that any legal claim through Asian courts is likely going to be long. Therefore, the best course of action is to avoid it where you can. The best way to do this is to use commercial levers to get you what you want. This could be negotiating terms of 30 days plus (not always easy) so that you have received the goods before you must pay the manufacturer. Or it could be protecting your IP in markets where you sell your products so that you can prevent others from selling your products.

We are on the Ground

At ET2C, we have people on the ground to make sure that your production does not go wrong, whether that be during product development through to end of line quality control. When issues do arise, the legal implications can be complex and time-consuming to address. Certainly, they could be also very costly so better to avoid them if possible! Some of the tips above should provide some thoughts for supplier contracts when you are engaging directly with manufacturers – remember to take legal advice as required.

For all your queries, please contact us at contact@et2cint.com .

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Shoe Suppliers: The Insight Series

Industry Insights / admin / manufacturing, Shoes, sourcing, suppliers

Shoe Suppliers Manufacturing ET2C Int sourcing China sourcing Vietnam

Shoe suppliers across the world make some 24 Billion shoes each year, in what is a more complex and labour-intensive industry than most people would expect.

The Insight Series

We work with our suppliers to develop products across an array of different sectors that rely on varying materials and a range of manufacturing techniques. It is always fascinating to see how each of these products are made, whether it is the number of hands that touch the products as it is manufactured or the machines that are employed as part of the production process.

Consumerism has firmly put our focus on what we want, rather than understanding how the product is actually made. We launched the ‘Insight-Series’ to explain how some of the products we manufacture (across China, Vietnam, India, Turkey) are made. Also, we want to provide you with a little bit more knowledge the next time you buy a product.

shoes manufacturing ET2C Int sourcing China

Shoe Suppliers

Our first insight is on the shoe industry. This is a traditionally labour-intensive industry, requiring a combination of human labour. It is no surprise that still the vast majority of shoes manufactured are still being produced in China. In fact China, on it’s own, has an output equivalent to all 75% of all other global manufacturing capacity. The ‘shoe dogs’ amongst us will point to a traditional manufacturing process that has not really evolved in decades. However, the industry is gearing up for a shift change in terms of (sustainable) materials and manufacturing methods. For example, additive printing (3D Printing) is being used by some large brands to make customised shoes and soles for an individual’s foot but using a more data led process.

The Manufacturing Process

Shoe suppliers make lots of different styles that require different elements of the traditional manufacturing processes. These elements are largely dependent on the materials, aesthetic and the function of the shoe. To keep it simple, we will focus on one style of shoe that covers the most common elements of shoe production – the ‘Sneaker’.

1. Moulding the Sole

The first part is to get the sole moulded. This involves designing the sole, the shape, the branding and the type of sole you want. Large metal moulds need to be created in accordance with the design and approved. This then allows the rubber (or blend) to be put in the mould and pressed to get the individual soles. The hardness of the rubber will impact the feel and function of the shoe, which can be tested using a durometer.

Shoe Suppliers shoes Manufacturing ET2C Int sourcing China

2. Fabric Uppers

The material needs to be selected. These can be cottons, leathers and a range of other products – we are seeing more and more Ocean Plastic woven fabrics being used from a sustainability perspective. Whichever material that is selected, is put on the die cutting machine for cutting. The ‘Die-Cutting’, involves a metal shape – much like a Cookie cutter for baking – that is sharp and is pressed through multiple layers of fabric at one time to get many fabric uppers. For leather hides being cut, there is more expertise required to make sure that marks on the hides are not part of the uppers so mass cutting is not possible.

3. Upper Stitching

Probably the most labour-intensive process and if you have ever been into a shoe factory, it is where most of the workers will be, sitting at sewing machines making the uppers from the cut fabrics. There can be many elements to this depending on the design, which can involve multiple seams being added to the upper.

Shoe Suppliers Manufacturing ET2C Int sourcing China Vietnam

4. Cemented (Cup) vs Vulcanised

Sneakers have two main methods of attaching the soles to the uppers. Vulcanised soles are for much larger scale production. In fact, they require a machine to fix the ‘twice-cooked’ rubber sole to the upper. In comparison, the cup sole is traditionally stitched and glued (with heat) to the upper part of the shoe. This allows EVA or TPR to be added into cup sole to provide additional cushioning.

5. Lasting

The lasts (inserts that are the shape of the shoe) are used to make the sneaker and make sure that there is consistency with the shape of the shoe – the fabric/leather does have some flex.

Although a simplified version of the process, imagine that at each stage there are 2-3 workers touching the shoe as it goes along the production line and you begin to get an appreciation as to what kind of labour resource is needed to make just one pair of sneakers. And this does not include any additional embellishments on the uppers and packaging the goods. Think about this next time you buy a pair of shoes!

The shoe industry is a global industry, although the two largest exporters of shoes are China and Vietnam. The latter has developed an expertise over the past decade particularly in trainers for the likes of Nike and Adidas.

Summary

Shoe suppliers are in the most part still using traditional labour-intensive manufacturing techniques. This is likely to change with the evolution of the latest technologies, such as additive printing.

At ET2C, we look to provide our clients with insights across our manufacturing base. For more information please contact us at contact@et2cint.com.

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Find Wholesale Suppliers in China: Useful Tips

Industry Insights / admin / sourcing, suppliers, Wholesale

Find Wholesale Suppliers in China sourcing ET2C

Find Wholesale Suppliers in China with these useful tips.

The internet has enabled much greater access to overseas markets and their supplier bases. At the touch of a button, one can access lists of suppliers and what products that they manufacture. But this is only one part of the sourcing process. Companies need to know how best to identify the right partners and what this really entails to truly benefit from offshore manufacturing.

The biggest and most obvious advantage of purchasing in bulk is paying a lower price for your products. Companies that buy direct from China know this very well and leverage the benefits of larger volumes. However, there are also several challenges for those who want to buy ‘wholesale’ volumes that people need to be aware.

warehouse sourcing ET2C

In the past, we already mentioned the importance of building up strong and trusting relationships with suppliers. But first of all, how to find the right wholesale supplier in China for you?

We already released a guide to “find the perfect match” between buyers and suppliers and mentioned the importance of these 5 key factors to consider:

Location
Communication
Quality control
Delivery
Culture.

How to find wholesale suppliers in China?

There are a number of different options to search and find wholesale suppliers in China, and we set out the main ones below:

Online research

The first, instinctive way to look for wholesale suppliers in China is through online searches. Unfortunately, just googling something like “best suppliers in China” can lead to a dead end. Let’s admit it, finding product suppliers for your business through an online research can be difficult and time-consuming.

In most cases, you are better placed to look for online wholesale supplier directories, which usually list thousands of suppliers. While some of these directories are completely free to use, others require merchants to pay a fee in order to gain access. It goes without saying that the list of the “best suppliers” are those you have to pay for.

Bonus tip.

Be aware that you will need to qualify any supplier that you think sounds right for your business. There are often instances where companies may not be quite what they say they are. So be careful and always investigate the suppliers.

Chinese Marketplaces

As many know, there are two highly popular Chinese marketplaces: Alibaba and AliExpress. In particular, Alibaba.com is one of the largest B2B marketplaces of manufacturers, importers, and wholesale distributors.

‍ Wholesale alibaba ecommerce suppliers China ET2C

This platform was founded in 1999 and today presents millions of products spanning 40 different categories. Given its breadth of wholesale products, Alibaba is not an easy platform to work with if you are a beginner. Certainly there are suppliers on these platforms that warrant skepticism and may present pitfalls when it comes to product quality. If you’re planning to deal with an Alibaba supplier, there are a couple of issues you need to keep in mind.

Obviously, since most suppliers on the platform are Chinese companies, you’ll experience a noticeable language barrier. In addition, there is a large number of middlemen on Alibaba who try to pose as manufacturers, reselling goods from legitimate manufacturers while marking up prices. Again, do you research to ensure you are working direct with the supplier, or with who you want to partner with.

Trade shows

Over the years, trade shows have been an important tool for sourcing and introducing thousands of new products. Used as a starting point for buyers to build a solid network of vendors and select the right suppliers with whom to do business.

As well as preparatory work (creating contacts and meetings in advance), buyers have the advantage of being able to visit booths and touch and look at product opportunities – something that has been missed this past 12 months!. In a lot of cases, buyers can visit the shows and actually place orders in person based on pricing given at the booth.

Find Wholesale Suppliers China Trade show sourcing ET2C — photo credit: Shinsuke Ikegame

On the other hand attending a huge trade show in China, like the Canton Fair for example, could be exhausting. Beside the trip to China, be prepared to walk several kilometers in a daedalus of aisles and stands, in a crowd of 200,000 people (not joking).

However, with the current travel restrictions in place, many trade shows have been cancelled. The biggest ones like the Canton Fair, have survived thanks to a conversion to the digital format. Obviously, without any chances to meet in person the vendors.

Sourcing Company

Certainly, if you are planning to outsource manufacturing to low-cost countries all by yourself, you might need additional assistance.  Should you need to identify new factories, then it is important to look to a local partner who you can collaborate with to visit the sites, engage with the owners and undertake the pre-screening work that you are not able to currently do. This will provide greater visibility and allow you to still go through an objective onboarding process.

Whether you have just started searching or are looking to enhance your vendor penetration and supplier management capability, sourcing companies present opportunities that a direct sourcing model may struggle to find.

Qualified sourcing companies in China, or Asia in general, introduce expertise capable of saving time and money along every step of the process. From identifying cost-effective sourcing materials to conducting audit-level quality control checks, professional sourcing agents/companies devote care to managing their clients’ sourcing needs.

Moreover, they can arrange quality assurance checks along every step of the process to ensure early identification of any issues and present viable solutions.

Do you need help?

Certainly, the best option is partnering with a product sourcing company which has a presence on the ground in the sourcing market, product knowledge and can add value when it comes to managing the supplier from development through to shipment.

At ET2C, we provide our clients with the transparency needed to best manage their suppliers across Asia and help with any risk mitigation strategy. For more information on how we can help you, please contact us at contact@et2cint.com.

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Virtual Factory Trips – Manage Suppliers from the Comfort of your Desk

Industry Insights / admin / suppliers, Virtual Factory Tours, Virtual Factory Trips

Virtual Factory Trips manage suppliers ET2C Int

Virtual Factory Trips give you access to the Asia sourcing market amidst travel restrictions.

A year has already passed since the Covid-19 virus entered our lives and transformed them forever. The consequential changes of the global pandemic have revolutionized every sector across our private and business lives. New restrictions and habits have tested our ability to adapt and be resilient.

According to a recent survey from McKinsey, in just a few months’ time, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business. Undoubtedly, many adopted new strategies and practices to stay competitive in this new business and economic environment.

For example, as lockdown restrictions and social distancing measures continue to shape our daily lives, most businesses (and workers) worldwide have become accustomed to remote working. In this context, from education to retail, companies sought digital support to continue their activities with a sense of “normality”.

Meeting Work Digital ET2C Int

Digital Technologies to stay competitive

The digitization of data, information flow and communication has been gaining pace over the past decade. The Pandemic has only accelerated this trend. In the last year, we have even seen global live events going digital and conferences have followed suit. The 127th Canton Fair went digital earlier in the year, which on the face of it resulted in a more efficient, cost-effective and more sustainable trade fair – albeit not sure how beneficial it actually was to overseas buyers. Undoubtedly, with travel restrictions in place, companies have lost access to their suppliers and the markets that they buy from.

Being close to your suppliers is paramount, in whatever guise, to leverage the benefits of buying from Asia. Therefore, considering the current environment, we have launched some new solutions to keep our clients ‘close’ to their suppliers.

Virtual Factory Trips

As part of your Asia sourcing strategy, ET2C has been running ‘Virtual Buying Trips’. This initiative has already enabled our clients to both meet new suppliers as well as catch-up with your incumbents to discuss on-going projects and developments. We are facilitating this across multiple sites/countries ensuring that our staff are always on-site with the factories during these discussions.

Virtual Factory Trips suppliers ET2C Int

Depending on your time zone, we have set-up and managed meetings with factories – bringing the factories to you! Also, we are taking clients to new factories via Zoom and Teams. Our staff are on-site and walk you through the production as well as play an integral part in the discussions with the factory management. No more long journeys or waiting for your train and all from the comfort of your own desk!

5 Advantages of Virtual Factory Trips

1. Transparency

In the current situation, having visibility of what is going behind the Asian “curtain” beyond emails and calls is essential. We have been working with companies who are ‘locked-out’ and struggles to get sight of what is actually going on. We can address this by being on-site and able to address your needs as required.

2. Sourcing Penetration

Obviously, a lot of companies are wrestling with other challenges, like lockdowns, stores being closed, and e-comm capabilities. However, the Sourcing function also can play an important strategic role. Identifying new potential suppliers across new markets is an essential way to deliver cost competitiveness and mitigate risk. Our Virtual Factory trips can help you, even when you cannot travel access these markets and continue looking for new manufacturing opportunities.

3. Product Development

We all know that product development is much more efficient when you are sitting in the factory’s sample room. Without that access, it becomes a much more cumbersome process that involves countless emails, samples being sent back and forth across oceans (see below!) and a pinch of frustration layered over the whole process. We can help manage this through understanding your needs and being virtually with you as you go through the adjustments, drawings, trims and so on. A much more efficient way of operating!

4. Quality

Our Virtual Factory Trips also give our clients visibility – in some cases in real-time – of the quality assurance or control processes. This gives you more than just the report, and allows you to take a ‘closer look’ at elements that you are not happy with. As we have learnt in the past months, the ability to respond quickly to changing circumstances is essential going forward as demand remains elusive and supply challenging.

Meeting Work Digital ET2C Int computer desk suppliers

5. Virtual Samples

Loosely connected, but it is worth pointing out that we have our own in-house photographic capability. The in-house team can take high-quality photos of your samples, saving you both costs and time. Some of our clients are even already using the team to take their photos for marketing purposes. Give us a try!

Make yourself comfortable and start your factory trip!

We hope that this Pandemic will soon be brought under control. The new normal for Asia sourcing needs relies on an upstream capability being put in place as well as the use of technology to take you to the factory gates. More broadly, never has a ‘presence on the ground’ been more necessary and at ET2C we have a range of solutions to give our clients access to Asian markets. For all your sourcing needs, including Virtual Buying Trips and Factory Trips, please contact us at unlockAsia@et2cint.com .

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Canton Fair 2.0 – The New Asia Sourcing

Industry Insights / admin / Canton Fair, suppliers

Canton Fair – a Trade Fair of the Times

The 127th Canton Fair opened its gates on Monday 15th June, closing on the 24th June. Once again, suppliers had set up their booths in eager anticipation of all the international buyers who would attend – no doubt in the current climate particularly keen to find new clients. However, this is a Trade Fair of the Times; it was in a digital format.

Canton Fair turns digital

As most businesses worldwide have become accustomed to remote working, the fair is coming to you from within your computer. The deep inhale of breath on day one as you stand atop the steps looking down over the cavernous 1.185 million m2 exhibition centre is no more. The Asia sourcing extravaganza has had to be nimble and use technology as a platform to connect sellers and buyers. The Government had hoped to hold the Fair this year as a signal of ‘business as usual’ back in April. However, with the virus spreading worldwide, it was clear that getting foreign visitors was going to be impossible. With travel restrictions in place, there was no other choice and perhaps it is the best option.

Canton Et2C International

Visiting the Fair

Registration was pretty straight forward and simply required buyers to go to the login page to enter their details and gain access to this virtual world. You could then navigate through a range of pages, even into virtual halls, and click on individual suppliers. Information ranged from product pictures (like in Alibaba), pictures of supplier’s facilities and certificates and even an option to speak to sales representatives via live feeds. It has been a good experiment for the digital evolution age, and one that has again perhaps been forced upon us earlier than expected on account of the Pandemic. It will be interesting to get the final footfall figures provided by the organizing body. The Canton Fair usually has some 200,000 visitors, being a traditional feature of many buyers’ Asia sourcing strategies.

The Digital World

However, this digital fair does raise a wider question, which is being asked across all areas of the global economy. Regardless of Covid, is this the format of choice going forward? After all, it is more efficient, cost-effective, more sustainable and still gives buyers the insight they need without the hassle. Of course, there are wider implications on the local Guangzhou economy without the visitors thronging through the hotels, restaurants and bars. In addition, Buyers would not be able to interact fully with the products themselves, try them out or feel them. But is this not a wider question for the consumer as well and can technology address this going forward? Just as consumers are now making purchasing decisions online without trying on the products, perhaps this is simply an extension of this new way of buying up the supply chain.

digital ET2C Int

Locked Out

The fact remains that at the time of writing, Asia sourcing markets have closed their borders. And there does not appear to be any signs that travel will start up over the Summer months, or perhaps even this year – for any meaningful travel at least. Companies have lost access to their suppliers and the markets that they buy from.

Canton Fair travel travelling airport

As we have always said, visibility across your Asian supply base is an integral part of leveraging the benefits. Therefore, it is more important than ever to think through the following points:

1. Access to your Suppliers

Whether it is virtual access or relying on a local partner with a presence on the ground, it is important to continue to manage your spend across price, quality and transparency of production.

2. Sourcing & New Markets

Even though sales markets are generally down, now is the time to be looking for alternative markets. Companies should be reducing dependency on any one market and spreading risk across multiple sourcing jurisdictions.

3. Quality

Managing quality is more important than ever. Without having access to your suppliers yourself, make sure you are working with a partner on the ground who can provide quality checks and quality assurance as required at your factories.

Summary

We will have to wait and see how ‘successful’ the 127th Canton Fair has been, and even after the statistics have been published, we may still not know the wider impact on how companies are engaging with their suppliers. We do know though that your feet will be all the better for the Virtual experience!

The Virtual Buying Trips

As part of your Asia sourcing strategy and help you get to your suppliers, we are currently working with our clients to set up ‘Virtual Buying Trips’. This initiative will enable you to both meet new suppliers as well as catch-up with your current suppliers on ongoing projects. We are facilitating this across multiple sites and countries as required ensuring that our staff are always on site with the factories during these discussions.

Virtual Sourcing ET2C International-s

We have even taken clients around factories during production, and this is all from the comfort of your home!
More broadly, never has a ‘presence on the ground’ been more necessary and at ET2C we have a range of solutions to give our clients access to Asian markets. If you are struggling in this current climate, please send us an email for more information at contact@et2cint.com.

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Buyers meet Suppliers. 5 key metrics to find the perfect match

Industry Insights / admin / buyers, sourcing, suppliers

Buyers Suppliers partnership sourcing Asia ET2C

Buyers are primarily responsible for planning, selecting and buying products for companies to either use in their everyday operations or resell to customers.
They research markets, analyze competitors, negotiate prices. Furthermore, they evaluate, test and eventually buy products and monitor purchase orders. Above all, they are the deal-makers.

Buyers and Suppliers

To succeed in these tasks, buyers also need to build up strong and trusting relationships with suppliers.
Good collaboration between buyers and suppliers is essential to efficiently delivering goods on a commercially sustainable basis.

If this cooperation fails, then the supply chain can begin to break down. This can cause disruption that results in intermittent supply, price fluctuations and quality problems.

Buyers Suppliers. partnership collaboration ET2C

5 key metrics to create the perfect match.

Certainly, relationships matter – even more so with the current travel restrictions in place. Moreover, if you are planning to outsource manufacturing to low-cost countries, you might need additional assistance. True partnerships and the benefits that they can deliver over the medium term will be increasingly important going forward. In this article, we will be providing you with the 5 key-metrics to find the perfect match with your suppliers.

1. Location

Selecting the right supplier requires you to understand why this company’s location is best suited to your needs. There may well be a variety of locations that suit your needs and understanding a range of factors will allow you to make the most informed choice.

sourcing location map Asia ET2C Int.
To find the best suited to manufacture your products, be sure to consider general key factors such as manufacturing capability, market experience, size of the business, financial health and IP as some examples. Also, it is paramount to consider those elements that relate to a specific location. These include access to certain raw materials, ability to export, exchange rate fluctuations, to name just a few.

2. Communication

At the outset, be clear as to the expectations. Set up a critical path with key milestones and agree with your suppliers what you expect from them as part of the management of the information flow. For example, make sure that there is a clear specification sheet that provides product details, colourways, packaging requirements, etc. This eliminates the risk of timing issues or mistakes executing the product quality. Remember: transparency is key to go far together.

Buyers Suppliers communication idea pitch speech

3. Quality Control

Never underestimate the importance of quality assurance and control as an integral part of a production process. Identifying the risks of a production within a critical path should be discussed internally and with the factory from a product perspective and then a quality program implemented to address any of these. Problem-solving is great but problem prevention is even better!

4. Delivery

Any production will always have issues and being able to address these in a timely manner is what is key to hitting delivery deadlines. A key component of this comes down to the supplier relationship and the communication channels. We always say a problem is not a problem if it is identified early and can be addressed.

5. Culture

When selecting a supplier, be sure to consider a wide range of factors, such as quality assurance, certifications, product innovation, terms, MOQs, capacity, stock holding, to name a few. But this will not be enough. You should ultimately be sure that your interests are shared, or at least aligned.
Look at your suppliers as an extension of your own enterprise. Make certain that your supplier’s company culture matches with the culture of your company. For example, this could involve ethical and management standards to ensure a safe working environment for local workers or sustainable production choices.

company culture ET2C Int.

Need help to find the right match?

One option is partnering with a product sourcing company which has a presence on the ground in the local market, product knowledge and can add value when it comes to managing the supplier from development through to shipment.
In the main, having some kind of local presence will only help enhance these relationships whether it be your own office, a sourcing company or some other third party presence.
At ET2C, we provide our clients with the transparency needed to best manage their suppliers across Asia and help with any risk mitigation strategy. For more information on how we can help you, please contact us at contact@et2cint.com.

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Your Go-To Guide for Supplier Risk Mitigation

Industry Insights / admin / business, Industry, risk mitigation, suppliers

Guide for Supplier Risk Mitigation

The internet has been an incredible enabler when it comes to sourcing new factories. In a few clicks, you can find a whole smorgasbord of suppliers ‘able’ to manufacture and deliver what you need. However, understanding the risks when outsourcing production and the risk mitigation strategies to address these is integral to avoiding any potential pitfalls. Asia, in particular, presents a greater challenge due to a more complex business environment that is overlaid with more marked cultural, language and regulatory differences.

With two decades of experience operating in Asia, we have honed our approach to vetting and onboarding suppliers to deliver on time and against specification. Below we have pulled together some key points to help with this end of the process.

Vetting a Supplier

Selecting the right supplier is critical. It will determine the success or failure of the production.

Risk Mitigation supplier

When selecting a supplier, you should ultimately be sure that your interests are shared, or at least aligned. Success for you needs to mean success for your supplier. There is simply no point in today’s environment with short-termism and lop-sided relationships in which the supplier is suffering on price, payment terms, short delivery times etc. There will only be one ultimate loser, and that is invariably the buyer. When first identifying the right supplier for your needs, make you address the points below:

1. Understand their business

Take an ‘under-the-hood’ approach, which means developing an understanding of the facility (how many production lines, people, seasonality, size, turnover etc.), their history, other clients (third party references if possible) and where their expertise lies.

2. Ask for their registration documents

We do this as a matter of course. Although often in a foreign language, be sure that the supplier is who they say they are and not an imposter! For example, an export agent and not the ultimate manufacturer as this may lead to additional costs and possible contractual complexities in the case of any disputes.

Risk Mitigation certification

3. Check any quality certifications

As independent verification of standards, these are useful but make sure that these are still within the validity period, they are verifiable by the governing bodies (not fakes) and are evident on any visits.

4. Visit the site and meet the management

Sounds simple, but we have seen many businesses pay suppliers without visiting the site and spending long enough with the management team. Understand their product expertise and manufacturing capability and what drives the management team (for example, is ethics important).

A lot of these can be addressed by having some kind of local presence on the ground, with staff who can speak the language and visit the factory to make sure that all is in order. We have seen factories change the signs on the side of the building as soon as the potential client leaves! Not a good omen.

factory manufacturing

Onboarding a Supplier

This is where we see a number of companies making mistakes when implementing a direct sourcing strategy. Any risk mitigation strategy has to be underpinned by law. This is complex where legal systems are less robust or less developed than in the West. Some key points to consider in this regard:

a. Legal Jurisdiction

In some Countries it is difficult to enforce a contract that has been breached. For example, it is not easy to enforce a purchase agreement against a Chinese factory governed by US law. And even when there is enforceability present, some legal systems are less than effective when it comes to claiming for any breach of contract. Make sure you take legal advice in this regard*.

b. Non-Disclosure Agreements

These are commonly used to ensure that there is protection against any company IP being shared or used. However, the best protection is to make sure that any NDA covers off Non-use, Non-disclosure and non-circumvention. These are commonly referred to as NNN agreements.

c. Communication Requirements

At the outset, be clear as to the expectations. Set up a critical path with key milestones and agree with your supplier what is expected of them as part of the management of the information flow. For example, make sure that there is a clear specification sheet that provides product details, colourways, packaging requirements etc. This eliminates the risk of timing issues or mistakes executing the product quality.

Communication Team work

Making sure that you understand the formal relationship that you are entering into and the fact that in a lot of cases it is a very alien business environment will put you in good stead. In addition, a lot of companies use commercial levers (like payment terms) to provide protection should something go wrong. Working with a company that has experience on the ground can help you manage such risks.

Summary

Over the years, we have been told and likewise heard of some production runs gone badly wrong. Being able to develop a relationship will define how easy it is to work with an overseas supplier. In Asia, relationships are of particular importance and leveraging this can help you benefit from the broad manufacturing base. Look at your suppliers as ‘Partners’, who can actually help you deliver the products you want, help drive innovation and sync with your own procurement technology rather than look simply over a short term horizon.

In the main, having some kind of local presence will only help enhance these relationships whether it be your own office, a sourcing company or some other third party presence. If you were manufacturing 30miles up the road from your head-office, you’d be visiting the facility on a regular basis. The same principle should stand true if the equivalent spend is put to work 6,000 miles away.

*None of the comments in this article should be construed as legal advice. Should you have any queries, you should seek legal advice relevant to your own individual circumstances

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